The Department of Financial Protection and Innovation issued subpoenas to 12 collection agencies with significant customer bases in California.
2/2/2021 11:30
With the Biden administration in place, many collection agencies have been speculating about what to expect from the Consumer Financial Protection Bureau, but there is also activity to watch at the state level. At the same time, a major investigation announced Jan. 19 by the California Department of Financial Protection and Innovation (DFPI) signals that this newly empowered state agency also intends to make its mark in the field of consumer protection.
In 2020, the California Consumer Financial Protection Law (CCFPL) effectively created the DFPI by renaming and substantially recasting the powers and structure of the Department of Business Oversight. The CCFPL granted the DFPI new and stronger regulatory powers, which took effect Jan. 1, 2021, increased its staffing levels, and created two new sub-agencies, the Division of Consumer Financial Protection and the Office of Financial Technology.
“We take our expanded responsibility very seriously,” DFPI Commissioner Manuel P. Alvarez said in a DFPI press release, “and are moving swiftly to ensure debt collectors do not violate the rights of California consumers.”
The DFPI announced its plans for reviewing consumer complaints in its monthly bulletin for January, ACA International previously reported.
In this first action under the expanded oversight and enforcement authority of the CCFPL, the DFPI issued subpoenas to 12 debt collection agencies with significant customer bases in California. The companies must respond to the subpoenas by mid-February.
The DFPI states that consumers from across the country filed complaints against the debt collectors, alleging they called consumers repeatedly, failed to validate debts and threatened to sue the consumers for debts they do not owe.
According to the DFPI’s press release, “[t]he subpoenas request documents illuminating how the companies collect debts and communicate with consumers. Both California and federal laws prohibit debt collectors from calling repeatedly over a short period of time to annoy or harass, threatening harm, calling at inconvenient or unusual times, or attempting to collect on a debt that a consumer does not owe.”
As the DFPI gets organized, agencies need to be aware of new California licensing requirements under the Debt Collection Licensing Act (SB 908) requiring California debt collectors and buyers to apply for a license from the DFPI by Dec. 31, 2021, ACA previously reported. This licensing provision will provide consumers a single location to check whether companies are licensed, and whether they have been subject to any enforcement actions, including license suspensions or revocations.
The DFPI will begin accepting applications for debt collector licenses in the late summer or early fall of 2021. The DFPI expects to begin reviewing those applications and begin issuing licenses by early 2022 and 2023.
Related Content from ACA International:
California to Begin Licensing and Regulation Process Jan. 1
California Announces Plans for Reviewing Consumer Complaints